card services, a fraudulent enterprise, i think. i know you advise and work with the ftc. are you aware of that problem? they are promoting a financial scheme which is absolutely fraudulent. >> we are. trade commission has more jurisdiction than we do. they advise us more than we advise them. workinga very good relationship with them. we are trying to make sure that we do not duplicate resources and that we work -- we think there are more problems out there that we can both handle. it has been a good working

relationship so far. >> almost every day i get from financial products that appear to be sponsored or promoted by the government or approved by the government. i have one example that came -- .esterday i would like some discussions on that. it is getting overblown. the u.s. government and congress is authorizing this. >> it is a terrible practice. i saw when i was attorney general in ohio. it will mimic the government because it has a certain amount of credibility. have the opportunity to enforce against those things, we take it seriously. market for the legitimate programs. it undermines the honest, self-respecting businesses trying to do things right. we recognize the gentleman

from california for five minutes. financial institution must hit an incredible low if it thinks that cloaking itself in congress is a step up. on ability to repay, somebody wants to mortgage their house to start a business. say, a risky business. rules imperil the bank that makes that loan, knowing that if the business doesn't work out, it is going to be difficult to pay back the loan? >> that will be the same consideration that the banker, lending institution has always given. they try to assess your ability to repay. if there is a one in 10 chance you will be a billionaire and a 50% chance that your as this is going to go down and you're going to have to sell the house in order to pay this loan

or you will get foreclosed on. is the bank punished for making out loan? that in allone likelihood, the borrower cannot repay. >> the bank has to make a reasonable determination on whether that loan will be repaid. that is their judgment to make. all they have to do is document that they'd did -- that they did that. things have to make these judgments about the risks that they are taking with their capital. >> that is a different kind of loan, when you know there is good chance you're going to have to take me home or force the sale of a home. >> at some point it may become a commercial loan as opposed to a residential loan. i want to pick up on another thetion with regards to

affiliated title company versus unaffiliated. studying thelly discrimination on the affiliated -- as a consumer, i could not care less whether my title company is affiliated or unaffiliated, i want the best possible deal. are you looking formally at how to fix that? dodd frank, they rode in various concerns and protections about sometimes affiliated entities where they would be steering. on the other hand, affiliated entities can provide more efficient one-stop shopping. i have talked to a number of people in the industry who are affected by different aspects of these rules. -- that is more here one where we has said clearly that the data will show us what the impact has and how that impacts with with the 10% fee cap.

that if you see a need for legislative fixes that you with a clearto us proposal. >> certainly. with regards to automobile oflers, there is controversy whether to cover anything the automobile dealers did or do. the equal credit opportunity act is something for you to focus on. those with lower incomes and lower credit scores pay more for credit. it is more difficult to arrange a loan, takes more time, and there is a greater risk. b hasu believe that the cfp sought adequate input from stakeholders on the issue of fair lending and vehicle financing? >> we are always interested in

having more. we have had more in the last six months than the six months before that. it has refined our thinking. it is helpful to us. the tougher it is to make alone, the more people have to pay. that is a credit worthiness determination. if creditworthy determination has been made and there is a rate that is gauged that somehow that rate would be pushed up because of financial incentives for people to push that up higher at the expense of the consumer. that is the premium we saw in the mortgage market that congress acted to stamp out. it is not quite the same dynamic, but there is some similar concern. >> i yield back. we recognize the chairman of our capital markets subcommittee. >> thank you, mr. chairman.

mr. director, you started your comments out by saying someone needs to stand beside the consumer. chairman'sng the questioning of you, i guess we should also agree that someone needs to stand beside the american taxpayer between them and you. questions number of that were put to you months ago and still have not been answered. that is perhaps because your that they testified are not accountable to congress or anyone else. one of the questions we put back to you in september was why is tonecessary for the cfpb collect credit card information from so many, literally millions. bureau projects there are over a billion credit card accounts in the u.s. last year.

they are collecting account level data on at least 991 million credit card accounts, which would account for 60% of the adult population in the united states. why is it necessary to collect so many credit card accounts on so many americans? believe that the bureau is needed and congress passed the measures to see that the consumers treated fairly. the bureau needs people looking over our shoulder to see that we are held to account for how we do what we do. that is this committee and others. that is why i am here today. the credit card industry, at the time, the purpose of information gathering by any agency is to be able to make informed judgments about policy. you would not want us shooting darts at a board. >> since you did not answer the , i put in -- ask the

chairman to put in my letter that i am about to submit. we asked someone to review how many of the 60% of the american public -- this is what he said about what you're doing. they are collecting far more data than necessary. it is expensive data collection that is both expensive and risky. limit of one percent like the census bureau does will achieve the same, if not better results. more --ou seem to do need more data than what the census bureau does for their data or anyone else does? >> with all respect to your

professor, there is economic experts on about 16 sides of every issue. we need work with industry and we are collecting -- when we are working with industries and we are collecting information, they -- they prefer to provide it wholesale. it is a little easier for them to provide the information. that has been our experience with them. that is why we proceeded as we have. >> do you tell the consumer you are collecting this data? will i receive a notice that you are collecting data on me? have had this conversation a number of times. we are not collecting about you. we are collecting aggregated information that is aggregated before it comes to us about what credit card companies are doing to their customers and how they

are treating their customers. >> i looked into some of the contracts you have. some of the information that you are collecting, you do not have my name and my address, but you do provide the zip code and the four digit zip code after it. you also provide -- you also get the date of birth. myyou have my zip code and last four digits and you know what my date of birth is, there is only one guy in my house that has that. you go to my neighbor and his house, you know what his daughter's birthday is. you are collecting that type of data. >> you are not the only house in your zip code. >> you are collecting the four digit zip code afterwards. that goes right to my house. >> we don't have information where we are trying to reverse engineer anything. i am not sure what you are talking about at this point.

you are talking about credit reporting. again, we aggregate the data. that is what we are doing. i have no interest in where you where,oney, in what, and and how. we are about aggregate information so we can determine what is going on in these markets so that we can bring law enforcement actions against people that are violating the law. >> the time for the gentleman is expired. the chair now recognizes the gentleman from new york. >> thank you. we appreciate you being here. we know they have been keeping you busy, but we appreciate the work you are doing. i want to briefly say that i

look forward to continuing to work with you in the area of manufactured housing. i think it is important that we have a voice and work together and try to fix and work collectively together. i want to add my voice to the many that are looking forward to working elective lee and resolve -- working collectively and resolving manufactured housing. issues is trying to --. i have lived a life where my parents were struggling, banks did not qualify, they do not have enough money. they needed certain credit to make ends meet. isking paycheck to paycheck a common thing. many americans are working paycheck to paycheck.

going to a bank is not available to them. are go to products that non-bankable. i have been working very closely, trying to make sure that they have access to some credit. i have been working with my colleagues on the other side to get something done. i want to make sure that the products are safe. that it isstatement extremely expensive to be poor. can you tell us how the cfpb is making sure that underserved consumers can access affordable and better suited products from some of the regulated creditors. question in for the the background. we have known for years that it is expensive to be poor.

don'tularly where you have good products or services being offered to you. we recognize that there is a need and demand among the public for small dollar credit. for people that don't have direct access to the banking system. been careful in trying thatsess the dynamics of marketplace. we put out a white paper last year on payday lending and on the products by banks that was similar to payday lending. we looked at the need for that credit and how it is being met. one of the problems and concerns we have is that the business model seems to depend on a significant law ms. -- significant lump of consumers 6, 8, 10over loans times. that is not benefiting them or helping them. there are others who use these

products and it meets their needs responsibly. y loans.t solely paidda it is car title loans. we have indicated that we are going to move ahead with making some policy judgments. our concern is yours. we want people to have access to the credit they need, but the kinds of products that they are -- they're going to make things better for them, not worse. you want to get rid of all of the products, and then those folks have no resources. then you get the loan shark. that is the person we want to make sure stays out of business. "the american banker" announced

that t-mobile will allow people banksk without going to by offering the reloadable repaid cards. -- prepaid cards. >> it is a concern of mine -- can we stay ahead of how fast some of these markets are moving. there are many innovators trying to make their way into the space of mobile banking. many of them may be offered by phone. there may be other mechanisms as well. we are trying to stay close to that. some of that is happening more quickly. some of that less quickly. it is difficult to predict how that is going to evolve. you can look around the world and see that it is arriving in various ways in other countries. it will likely arrive here as well. it poses challenges to a regulatory system that is built on a physical system of banks,

so on. and so forth and we are trying to be aware of it and stay on top of it and recognize that we are going to need to work with other regulators to be effective in this space. we will probably need help from congress to regulate it. thank you, mr. chairman. director, thank you for coming this morning. u.s.breaches at major retailers, including the most recent breach at target has raised anxiety levels about personal information. most americans would be surprised to learn that one of the largest repositories of financial data is retained by the cfpb. the bureau is tracking 991 million credit card accounts.

as 227 million mortgages. we know the bureau is experiencing -- has already experienced free breaches -- three breaches at its consumer complaint portal. there may be many more to come. consumer'srantee the personal financial information is 100% secure? there are a lot of comparisons made, some of them casually, about us in relation to the stimulus bill. to the health care, which we have nothing to do with. the issue you raise is an important one, it is one that i take seriously, just as you take it seriously. attempt tosay is, we

safeguard any information we have about the american public in two ways. we are trying to gather aggregated information, not, i don't want to know or care about your personal spending habits. that gets in my way. there are provisions in the law for that type of personal information and how you have to safeguard it. people have to give us their details in order to get their arelaint be handled, we complying with all of the security and privacy revisions that are extensive and federal law, trying to do that carefully. people are looking at us to see how we are doing that. it is something i am mindful of and we will do our absolute best not to have a problem in this area. i recognize that problem with her this agency. it would not be what you or we want. >> you are collecting a lot of

data and you are doing the best you can. the president said recently, all of us understand that the standards of government surveillance must be higher, given the unique power of the state. it is not enough for leaders to say trust us. we will not abuse the data we collect. history has too many examples of when that trust has been breached. you are saying that you are not doing it, but the president says that att always take face value. this data be reversed engineered? giving me quotes about the nsa, which is not us and not what we are doing. you are in a contest of who can collect the most information. i fundamentally reject the categorization.

we are doing,at we are making every effort to be very careful in satisfying the federal law in terms of security and privacy and in terms of treating consumers properly. if we are careless with their information, that is not consistent with our mission. we are not. >> can this data be reverse engineered? reversedr data can be engineered is a complicated one. that is why we aggregate as much as we can. there may be information gathering said the government has done across many sectors that at one time could not be reversed engineered. that is something we are careful about an mindful of. -- that is not an issue you can answer and a one time for all time. it may change over time. >> the fact that you are concerned about it, do you think

it can be reversed engineered? >> we are concerned about making sure that could not happen, as much as possible. reverset the bureau is engineering anything. nobody has a time or interest to do that. it would only cause us trouble. we're trying to be mindful as we gather information, making sure that it would not be subject to reverse engineering by us or anyone, because i do not need that kind of headache. there is some concern about it, in one of your contracts, they say they agree not to directly or indirectly reverse engineer. if that capability did not exist, you would not have it in your contract. >> we try to make sure that will not happen. it is a term in our contract and we will hold our contractors to that. >> we recognize the gentleman from missouri. >> thank you gentlemen. tank you for your testimony.

-- thank you for your testimony. have expressed interest in working with the cfpb to make sure that manufactured housing remains a viable alternative for the many families that benefit from this important product. many times, when we attempt to address these types of issues, we unintentionally create loopholes that undermine consumer protections instead of fixing the problem. can you commit to working with us to address the concerns of the manufacturing housing industry while continuing to protect our constituents from the bad actors that the rules are meant to target. >> i commit to it. we have been open in excess of the two representatives from both the building and lending industry.

they have made a strong case for why this fits a particular need in the population. i am familiar with it from my own personal experience, where i grew up and my family. yes. we are interested in those issues. >> thank you. in the area of mortgage rules, b takeneps has the cfp to educate and help lenders as well as consumers understand your new rules? wei am proud of the work have done in that area. when we finalized our rules last weuary, we could have said, are done and that is your problem and we are moving onto other things. we dug in along side them and made it clear that we had a whole project around regulatory implementation. we wanted to hear from them what problems they may be running into that we hadn't foreseen and that they had foreseen.

-- they had not for seen. we did the examination protocols six months in advance of people could get used to that and see that. we continue to work with industry and take -- by the fall of the year, they said to us, we appreciate you being so helpful. please stop being so helpful until january 10 because we need to finalize. we have been taking further comments and issues and we will address some of those as well. there will be new circumstances that people will run into that was not anticipated. we will see what the data shows about impacts on the markets. we do not want to upset the housing or mortgage market. >> the we have any data on any

decline into mortgages? >> it is very hard to say anything. it is too soon. lending wasrtgage up for each of the first two weeks under our rule. it is such a small slice, it is hard to make anything of that. >> thank you. in the area of service members, the dodd frank created the area of service members affairs to address the specific challenges that service members face. consumer response received approximately 3800 complaints and juneuly 1, 2000 12 20, 2013. what are some of the most common grievances expressed by service members and what is the bureau

done or can it do to address the concerns? >> a lot of the people i get to , i'm lucky to work with them. holly petraeus has tremendous credibility across the country. she has lived that life for self. her self.fe a complaint,o found a lot of complaints, got 6.5 million dollars back to thousands of service members. we have addressed a lot of individual complaints. we have addressed problems like permanent change of station orders which did not qualify people for the kinds of adjustments that other people were getting any mortgage market. the dod and veteran affairs have been very responsive to the problems that we identify. they have solved a lot of

problems and it is a great partnership that we have. >> thank you for your advocacy. >> we recognize the gentleman from north carolina. to follow the chairman's opening line of questions about building renovation -- would you provide the committee with the occupancy agreement between the bureau and the occ? i don't know there would be a reason we cannot provide that. i would be surprised if we have not provided it. >> you have not. it would be helpful for us to understand this. >> that was signed before i became director. easier, it is a 20 year contract that you have disclosed in your report.

you spent $12 million a year in rent, you disclosed that. we appreciate the fact that you disclosed that. we also know that the value of the building that you are asupying his $153.7 million of 2011. million,pending $55 based on your disclosures, then 95, then 150 million. it looks odd to us. that is why i would like to know the details. you said today that you will have to move out of this andding at you are leasing you are going to have to find temporary space. very annoying problem for us and it has not made anyone happy. ofyou think about the cost it, it seems insane that you're spending $150 million of

money and $12y -- million of land and you're not even going to be in it. dollars of rent and you're not even going to be in it. it must've been used heavily. it was built in the 1970's or 1960's. if i were consumer, i would be complaining about the building if i owned it. >> can you provide us about the details of this temporary arrangement for space and what it will cost? spending has and become more transparent as we build up this agency. all of that is available on our website each order. a letter theu beginning of the month. i appreciate your response.

question -- i understand my letter request was about the details of your budget. you responded back with some links on your website. i appreciate that. one was a newly issued report on your financials for the year. i asked for the resource detailing operating levels detail within your budget. the report you sent me a link to , i went to it, look at it, and the level of detail there is fairly nonspecific. i am asking for a line item haveture of this and you $166 million line item that has three lines of description in order to add up to $166 million. -- preventeat name financial harm to consumers

while promoting practices that benefit them. we don't oppose that idea, we would just like to know what that is. somethingu has done proper, you disclose contracts. we are able to ask you about contracts. i know that you spent $2.5 million to pay for web ads to drive traffic to your website. i know that. i know who you contracted with. i also know whether it is a no-bid contract, a big contract. emphasis onone real competition in our contract. maker, you are also spending a substantial amount in salaries and benefits, you disclosed that. not in the detailed levels in your budget estimates. on one people working area. we do not know anything more than that.

come before to congress, we will have questions about your contracts. even if you have enormous amounts of wasteful spending, to the tune of $200 million or $300 million a year, we don't know the details of it. i would ask the juice amid the budget line item that other agencies -- i would ask that you submit the budget line item that other agencies have to submit. detail of ourof budget has grown greater as we have been adapting. it is my understanding that the amount of information we provide about our budget is comparable to that of other agencies and we are now providing it on our website on a quarterly basis, which other agencies do not do. if you have other views about how much detail we should be providing -- >> the time has now expired. we recognize mr. scott for five

minutes. a want to ask you about the 2000 13 fair lending guidance for automobile dealers. 2013 fair lending guidance from mobile dealers. -- for automobile dealers. i am very concerned about this because i, along with 12 other members of this committee, wrote you a letter, expressing our concerns in may, asking you to respond. we have not gotten a response as of yet. this is very critical. number one, there was no study that was done on the impact of flat fees for consumers or how it would affect consumers and

the availability of them getting credit. i'm concerned about the bureau's actions because they have had unintended consequences of raising credit cards for consumers, pushing the marginally creditworthy out of if, foret entirely, and learn, as many of us here in congress have learned, that the broad adoption of dealer compensation methods that do not permit consumers to negotiate lower prices would hurt marginally creditworthy consumers, including many minorities, of which you are admirably trying to make sure have fairness. if you knew this, with the bureau review this guide as

it is used to finance sources that you issued last march? i am trying to follow all of what you described. first of all, the bulletin that we put out -- i believe we did respond to your may 28 letter. we will get to the bottom of that and make sure we are on the same page. weould be very surprised if had let seven or eight months go by. i checked with my office. you did not. that is not the point here. i mentioned that so that you could see the urgency of moving forward. we need to treat our auto dealers and consumers with fairness. 23 guidance is not fair. >> the problem that we are trying to address is one where people walk in to get a loan to buy a car -- you say that is a critical thing in suburban and

rural areas to get around. they are treated differently. -- a aredifferent required to pay different amounts, higher amounts, based solely on the color of their skin or their ethnic background. that is not right. that is what we are trying to address. in terms of how we are trying to address it, it becomes more complicated. the bulletin we put out last march, there was nothing unfair about it. it was restating law that is on the books and followed by other agencies am including the department of justice, for almost 20 years. we laid out that we also felt that we were going to take the same approach. the auto industry -- there is a lot of concern about this. the auto lending industry is doing just fine. they had a banner year in 2013 and i expect they will have a banner year in 2014. the notion that they were killing off the ability of

people to compete in this market, they are not. we had an enforcement action bore fruit against an ally. i want you to do a great job. if the people, if what you are great, between the people who are buying the cars, and if they have the input, will they have the input, which in fact, they did not. would it not have been more receive input from them, which you did not. to hear concerns from them. ,o hear their concerns directly who are directly impacted by this guidance before it was

issued. this could have been avoided. the guidance itself is exactly a restatement of existing law. that is all it is. >> we have had lots of discussions with lenders over whom we have jurisdiction. we were careful about not reaching out to dealers who we do not have jurisdiction over. this is one congressman who represents the suburbs, where the action is, were they have to get fair treatment. officecould work with my more closely to make sure that my dealers and my consumers are treated more fairly. time for the gentleman has expired. we recognize the german from new mexico. -- the gentleman from new mexico. , a federalollow-up

judge ruled that metadata collection was unconstitutional by the nsa. will you submit a request for the federal judge to over -- to look at your collection and see if it is constitutional? would you do that? statute,l follow our which is the law that congress gave us. >> time belongs to the german from new mexico. -- time belongs to the gentleman from new mexico. >> the collection of data like you are collecting has political value in campaigns. i worry there might be someone down the system who might release that information and you are saying, no, you're not going to ask a judge if it is constitutional.

using, your testimony am where you described -- amusing, where you described that many of your friends live in manufactured housing. i wonder, have you talked to any people who deal with manufactured housing? e-mail,ry 23 i got this good morning, steve. i return from a seminar that explain how we have to conduct our business as manufactured home retailers. now that the new laws are in effect, i cannot believe what i have to do to sell homes and how difficult it will be to not trip up. it takes the wind out of my sa il. it keeps getting more and more difficult to operate a business and more easy to get sued for not dotting i's or crossing a t.

that is the legacy that lives in the manufactured housing industry that you have given lip service to today and the last year. i find it amusing, your indignation that one-size-fits-all characterization, before you even came here, was so offensive. you are doing the same thing today. you are declaring today that many times the mobile home, the manufactured housing, that the regular house cannot be built there. my counting is flat from one end to the other. 50% of the homes are manufactured homes. is notare that one lot suitable for regular homes, but it is suitable for those that many of your friends living, i find that to be generalist it in icng, one size -- generalist thinking, one-size-fits-all thinking.

i wonder how many banks that lend to manufactured home buyers did you actually talk to. they tell me they have the highest rate of repayment of any form of home. you still have one-size-fits-all in the balloon payments. -- that kicks a lender out of the qualified mortgage market without secondary. when you do that in new mexico, we have 70 days of capital to lend for houses in the entire state. when you kick them out of the secondary mortgage market, you then say that you have to lend that money for that piece of property and when it pays off 30 years from now, you can lend for a new house. you are going to choke down the rural small areas. the areas that do not fit your definition of what is right for people to live in. your ideas that balloon

mortgages are not somehow okay. none of your people from wall street are going to come to new a trailer live oin and live on a 30 year know. note.year one-size-fits-all is not working. it is a war on the poor that is being conducted by you and this administration and it is one where the low income suffer the most. other options.e i find your testimony to be diminishing, demeaning to the people that are suffering the most. i wish that you would change the rules instead of coming here and giving lip service. thank you. i yield back. point of personal privilege of the five minute filibuster that resulted in no questions to

me. that is the most official -- offensive comments i have heard. courtesy to the witness, if you would like a moment to respond, the chair will yield you a brief moment. >> it is a completely unfounded suggestion that we are using data for color -- political complaints. the notion that i am being condescending and talking about manufactured housing because as a fact, i have friends and family members who have lived in and live in, i do not begin to understand where you're coming from on that. >> the chair now recognizes the gentlelady from new york. i think the chair for yielding. i would like to yield him as

much time as he would like to respond to the line of disrespectful questioning. that we aretion being condescending in trying to take account of these issues and recognize that there are different types of properties that have different needs in suburban areas is amusing to you. is not amusing to me. we are trying to meet the needs of consumers across the country. that is the mandate of this bureau. we will do it as best we can. the notion that we are going to take information and use it for political campaigns is deeply offensive. you do not have a shred of evidence on which you are basing that. it is wild allegation and it is not the setting of this committee. cfpb toeated the protect consumers. we saw in the financial crisis that consumers were not thought about all. or an afterthought. it is inappropriate to have one

agency whose prime focus is to make sure that the abusive practices and unfair, deceptive practices are not on the market. i believe your record speaks for itself. really coming forward with well-thought-out researched positions that help the economic security of our country by being fair to people. i would also like to ask, specifically an area you are working on, that is prepaid cards. ,hat is becoming an emerging important market. they hold a lot of potential, but they are not subject to federal protections or disclosure standards. that makes it difficult for consumers to be able to do comparison shopping. your office has been working on a proposed rule for prepaid cards for quite a while. i look forward to seeing what you come out with. questions insic

this area. first, when does the bureau plan to release its prepaid card based onand second, your research, how should we as policymakers, think about card policies question mark should we focus on clear, consistent disclosure, fees to consumers, or are there other limitations that need to be placed on prepaid cards? you.ank the issue that you raise is important. it is increasingly important for low and moderate income consumers for whom a prepaid card may be an alternative mechanism to a bank account or a check-cashing or other things that can be costly. the stage at which the prepaid at thesue is at bureau is that the proposed rule

stage. we are on the verge of taking -- on the verge of writing rules. prepaid cards, most consumers do not realize that when they reach in their wallet and pull out a credit card, debit card, a big car, i think they think they have the same -- a prepaid card, i think they think they have the same protections across all of those cards. they do not. you are asking about the balance between -- do you proceed through improving disclosures. my general impression is that in most of these markets, we need better disclosures in the roles. on a proposalting for comment and then finalizing. action here is needed. it is an emerging market that is

over $100 billion being loaded onto these cards every year. people need protections in a balanced way. we welcome the input of members of this committee as well as consumers and industry on getting those roles right. >> where we stand on your rule on overdraft protections. i understand you are ruling -- reviewing that. overdraft would not be part of a prepaid card, but the overdraft detection -- retention rule, where do you stand on that? pre-rolls at the stage. not as far along as prepaid cards. we are looking at that and .rying to figure out

there may be some practices that concern us in that area, so we're moving forward and trying to figure out how to approach those issues. it is not as far along as prepaid cards. >> the chair recognizes the gentleman from california. >> thank you. director, thank you. i wanted to raise some concerns, but lower the blood pressure on this issue on the question of databaseu's national project with the fhfa. there are concerns with the privacy issue. at the end of the day, you put together a database like that, it will include credit information on 50 million people here in the united states.

that is just the project. in your opinion, this information, the data collected, does not include personally identifiable information, as you point out. >> that is my understanding. is, is itl question searchable? is it -- can it be reverse that youd and i assume do not believe that you can identify a single individual through that process. risk look at the actual that consumers have, we see the recent target breach, which in theory, should not come a could not happen. we saw what happened with michael's. even with the best of intentions, high-security -- you have companies with great

reputational risk on the line. they did everything they could to make sure that a breach of personal information did not happen. it happened. now we're talking about the federal government. breaches of information that the federal government level, 2012,ing to the gao, in there were 22,000 data breaches. is small in terms of personally identifiable information. some of them were very large. it was a 42% increase from the year before. it was a 100% increase from the year before that. i would like to play a video clip from a presentation given last year. let's go to that if we could, mr. chairman. [video clip] a -- 95% of those are

unique. it up. look fairfax county, it is easy to find people. you can match them to our database. at present, we allow any federal employee to gain access. i am not sure that our vision would be that only federal employees can look at data. that is probably not enough. mr. avery states that the information included in the easily reverse engineered. will bee troubling, it available to any federal employee in the country and possibly others.

there is a concern about consumer privacy in this case. i don't believe the project should move forward until the issues are adequately addressed. from your standpoint, you are weighing the assumed benefits of the database. do you believe that outweighs the real privacy concerns? judgment and a balance. i would say two things in response. the homeowner- market is one where there is a tremendous amount of information freely available to the public. i do not know how they do things in california, but in ohio, the home that i own is on our county auditor's website. or is a picture of it, the valuation of it, the amount of taxes i pay.

all of that information is public information. i had a law school class that told me how much information there is out there. in and knew all about my homeowner transactions. that was true 20 years ago. nonetheless, it does not lessen the privacy concerns. let's get the paradox here. i'm getting questions from you and your colleagues. in theould we be doing mortgage market? have we drawn to tightly the box around qm? is manufactured housing being unfairly affected or undermined? andrder to respond to you to get this right and for you to get it right and us to get it right, we have to get information about the market. we did notnd was always have the kind of information we would like to have had about the mortgage market. the us will help us provide it. we will be able to have

confidence in whether we are getting this right or should we adjusted. that is what your colleagues are crying for. it depends on information. >> we had 20,000 breaches. i would like to submit something else for the record. a letter on data security and protection. the chair now recognizes the gentleman from texas. >> thank you. i thank you again for coming before us today. i look forward to your visit. i relocated. i am appreciative of the fact that you are willing to stand up for consumers. say stand up, i mean you take a firm position. you really believe in what you do. it comes through, and that is important to consumers. i want to visit with you about

.he $3 billion in refunds $3 billion. that is a lot of money. it impacted nine point 7 million consumers. -- 9.7 million consumers. of you give an overview this? >> this is basic law enforcement work. one basic principle that everybody agrees with his people should have to comply with the law. if they violate the law in a way that hurts people, harms people financially, those people should have a right to get their money back. that is something we are trying to do. we have been engaged in addressing violations of the law with credit car add-on products which has been a big source of address for consumers.

that has been well-established and it is not unique to the united states. they had similar problems in the united kingdom. the large mortgage servicing settlement we reached recently with a large nonbank mortgage servicer, for violations of the law and cracked us is that were unfair -- and practices that were unfair. these are things, that any marketplace that works, the good businesses are protected against those that violate the law and get a competitive advantage by doing so. this is in everybody's interest to do this. it depends on having information and being able to analyze what is going on in the market. that is why we feel so strongly about having the information on which to base this. we will continue to do